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tv   Bloomberg Daybreak Asia  Bloomberg  July 17, 2017 7:00pm-9:00pm EDT

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>> wall street finishing the flat. the dollar ending a five-day losing streak. sterling falling as the brexit talks resume. global stocks are flirting, but not in china. roll afteron a hours. a record second quarter. overseas subscribers topping those at home. the group is accused of
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breaking investment rules. >> this is daybreak asia, coming bloomberg'srom headquarters. >> i am shery ahn. betty, it seems to be all about earnings this week. we had netflix overnight, but we are gearing up to bank of america, goldman sachs, ibm. earnings season is usually friendly for stocks. we see another round of gains. betty: we absolutely will be. it is interesting because, you know, we know earnings will be a driver, but there is certainly differing consensus or differing aboutamong strategists how much earnings will propel markets higher. we know mike wilson says it could propel the markets up 10%. we have a guest coming up who does not think quite that, is probably on the opposite end of that spectrum. diverging views are forming. shery: i will be quite curious
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to ask him why he is so pessimistic. many in asia are looking forward to other data points including china's property prices, not to mention we do get rba's in the july meeting minutes. take a look at what the markets are doing right now. new zealand flat at the moment. 76.97. -- new zealand flat at the moment. 7697. missing estimates, coming in flat or no growth when it came to inflation. take a look at sydney. futures right now losing ground. we saw the asx 200 losing .2% in the previous session. the rba july a meeting minutes coming up. not a lot expected on that front. of course, we do get the volatile numbers on thursday. also japan coming back from its holiday. it did gain ground in the last week. the japanese yen barely moved
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over the last couple of sessions, and it is not doing much. 112.62. we do get the boj policy on thursday as well. we're looking forward to a lot of data points including central bank decisions. a lot to do with what the u.s. dollar is doing. it halted five sessions of the kleins, and that is a face -- of affectingnd that is markets, bedding. betty: little change. discretionary shares, they were offset by health care companies. atpretty much help starts the end. joining us now is su keenan with more. give us the rundown. : the real strong performers were the metals and commodities. copper up. close.ou see the it did not really reflect the activity of the day. if we go into some of the big
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movers, tesla was under big pressure. the car that had a crash and ended up upside down was on autopilot. the driver emailed of the company, and the founder, elon musk, said the guy was not on autopilot. have him telling people he thought the stock was overvalued and he backtracked a bit from that comment. that added to the pressure. sales growth will be hurt on the computer crash. that put a stock under pressure. .e mentioned freeport-mcmoran let us going to the bloomberg. risk is on. what you are seeing here, that white line, is the global risk aversion macro index. you notice it peaked in 2008 and 2009. look at the far right side of 2017. it is dropping as we head for those new highs. we had a poll out.
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many people, most are disappointed with the president donald trump. take a listen to this fund manager on how business leaders are as well. >> there is a rising level of frustration. we had optimism early in the year, and now, we're sitting here in july, and there is a recognition that a lot of the promise of what we wanted to get done, tax reform, infrastructure, just is not gathering momentum. su: questions about momentum, disappointment with washington. all of this while we are flirting with new highs in the market. push and pull of the market. betty: flirting with new highs, at netflix. they killed it. it was not just the sales beat, but also subscriber growth, which was where some people were more skeptical about the company. give us the highlights. that is where they came in the strongest. they shot it out of the box, and the stock is responding, up better than 9% in after-hours rating.
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that will set up netflix ready a strong trade in the tuesday session on wall street. what they said was the streaming video provider went to a record second quarter in terms of surpassing forecasts for growth. they boosted -- in terms of subscribers, they blew away the numbers by double. they are spending $6 billion on programming in 2017 alone. projecting 2.6 million new international sign-ups and they got more than that. the mojo looks like it is going to continue. they are going to add 4.4 million new subscribers. versus an instrument of 3.9 million in the current quarter. net income will likely be $.32 per share. aat is quite optimistic given shot in the arm for investors buying after hours. your to date stock has done very strong as well. in the got more earnings financials. we have goldman, bank of america, and harley davidson.
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a widely followed a stock. they will be reporting on tuesday as well. i think i helped netflix. i mean my subscription. su keenan, thank you for joining us from new york with a earnings we netflix just drop your letters get the first word news with nina melendez. talks in brussels with the u.k. acknowledging little has been achieved so far. david davis says it is crucial to reach what david davis called the substance of the matter. the two sides discussed the rights of citizens in the u.k. and britain's potential divorce will. michel barnier has ruled out trade talks until those two issues are dealt with. six months into the trump presidency, most americans feel fairly optimistic about their jobs, the economy, for the foreseeable future. for the latest bloomberg national poll, it shows four in 10 approve of what a trump is
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doing -- of what trump is doing in the white house. that is up 12 percentage points from december. blackrock ceo larry says the u.s. economy is growing more slowly than expected. administration's inability to act is a threat. he told bloomberg there are dark clouds building and there is not a rise in personal income said he hoped. he said revenue missed expectations for the fourth consecutive quarter according to data compiled by bloomberg. time small-cap index plunged more than 4% on monday, its theest loss, extending retreat by 10%, worse than any of the 96 global benchmarks tracked by bloomberg and compares with a 10% rise by the msci small-cap index. jobs are being hurt by concerns of rising costs. corporate governance, liquidity, and regulatory oversight. go from his 24 hours a day,
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powered by more than 2700 journalists and analysts in more than 120 countries. i am nina melendez. this is bloomberg. shery: there is a new twist in the tale of wanda's ambitions. china may cut funding and will not give regulatory approval for some deals. wanda is held by china's's second richest man. the move could stymie his plans for a global entertainment empire. bloomberg's reporter joins us from l.a.. tell us which deals are threatened here. guest: it is interesting. apparently, there are six different deals being scrutinized according to our reporting. those include ones which have been completed already. cinemas, asf nordic recently, deals that have made wanda the biggest company that is running movie
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screens around the world. they are really a number one when it comes to exhibition in the movie industry. they haven't tried to get a greater share of content states in movie companies, which he has not done quite yet. this has put a lid on any of those ambitions. betty: absolutely. does it make others in hollywood even more wary of not just partnering with wanda, but other chinese investors? anousha: definitely in the first six month of this year, we have seen a chilling effect on any kind of deals. i have been talking to people here in los angeles, dealmakers and others that work in the industry, to get their reaction, and while some might have seen this coming, sellers that would have liked to sell to chinese buyers at a high price, will have to factor in the added risk of closing, even if there was an price.ade, an attractive
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that is what has been happening in the past. you have deals like the sale of legendary entertainment and wanda's offer for dick clark, a producer of tv shows, for $1 billion, which is seen as very high. that deal did not go through in the end. you might have had a buyer with a very big ticket price, but the risk of closing now is probably too high. betty: probably. anousha sakoui, thank you for joining us on the fallout on this crackdown from wanda. we will follow this story. wong's joining us later. we will talk about the push towards a cashless economy in asia. shery: up next, we will ask what to expect from the latest michael,season with predicting growth for the rest of the year. this is bloomberg. ♪
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shery: we are counting down to asia's first major market open this morning. japan comes back from its marine day holiday. we are seeing futures on the downside right now. this is daybreak asia. i am shery ahn in hong kong. betty: i am betty liu in new york. a big week for earnings in the u.s.. you mentioned we got a earnings from bank of america, goldman sachs, morgan stanley. andorgan stanley, ibm, microsoft. netflix blew it out of the water. likely to hit the nasdaq. joining us now to tell us what to watch for is the chief global strategist, michael purvis. we were focusing an earlier on this call coming out from mike wilson at morgan stanley. i don't want you to -- pretty bullish year saying we -- pretty bullish here saying we
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are going to grind higher, but certainly to another record here of 10%. what do you think of a bullish forecast like that? i know you are on the opposite end here. michael: i am not necessarily on the opposite end. betty: they are pretty low though. michael: yeah, that was from back right after the election when everyone was laying out there 2017 and 18 forecast where we went through price targets and earning targets. recently, i took my earnings target, 127 for the year, down to 116. the lowest of the top-down strategist on earnings. keep in mind, to your point about, can we have further momentum to the upside, sure. even and earnings reduction with the macro background we have doesn't necessarily have to be a hugely volatile event. we may wealthy another 100 points higher on the s&p before we end up back to 2350 or 2400 at the end of the year.
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i think this issue of earnings, just as we are at the second quarter come unfolding, i think is very relevant. betty: i want to just pull up a chart, which kind of shows you forecast is,in earnings and where it has been, and show you this gap we are seeing. this chart, b #btv 49094. you can see this is at 113. 13042. forward eps at it has been widening lately. what is going on. ? michael: i have a different version of that. betty: you are clearly on this and here. michael: i think what has clearly happened is that there has been a couple very positive developments. growthbally synchronized to varying degrees has been on and off and that is a very powerful notion.
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is that in that gap the first half of 2016, you had pretty low numbers, so what came .ut of the earnings, q3 into q4 i think the reality is, as we get into the second half of the year, deep into the second half of the year, labor day and beyond, i think we are going to higher ind a big leg basic economic fundamentals in the united states to help support that. right now, when you look at consensus for bloomberg forecast for nominal gdp, you are sort of at the 4.6% level. over the last several years, that typically supports earnings growth in the single-digit. it does not support -- you get to 130 this year, which is what that number suggested. that is 20% year-over-year earnings growth. effect from the second half will be much harder than they were in q1 or q2 for that matter. michael, i want to point
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to risk appetite right now, because risk appetite seems to be pretty strong. if you take a look at this chart, 4503, you can see that citigroup global risk aversion index has fallen to a three-year low, and in fact, that is back to precrisis levels. if you have a strong risk on sentiment, wouldn't equity markets rise? or is it that you are forcing some sort of session in the second half? michael: i'm not seeing any sort of recession whatsoever. i think my main point is the twoet may be paying another multiple points higher than advertised by consensus estimates. that is all. if risk is on, and it seems to be on, you have globally think ,he nice growth, central banks all in a reasonably constructive environment, and certainly very gradual, that could be very
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powerful. it is important to point out that since the great financial crisis, there has always been one major economy in the doghouse. that in 2009, it was the united rates and the u.k. as you got in -- the united states and the u.k. china in 2015. today, you have every major economy not in the doghouse. doingthey are not great and japan is figuring out some things, but i think that is a very important reason why that graph you just posted is where it is. shery: and you also have to -- talking about central banks -- you have to look out the german s are doing. it shows the correlation with u.s. treasury yields will affect the market. michael: that is a very important point. if you look at eurozone economic and inflation metrics,
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they are the most developed markets. look at core inflation, actual inflation, where the spread between eurozone and united states inflation, you know, really has been improving in favor of the eurozone. so the point i am getting at has been at the bund very stressed yield, cap that 50 basis points. point cap would roughly correlate to our 250 basis cap on our 10 year treasury yield. the follow-through on european economic data and the inflation data, that could push mario draghi into a decidedly more hawkish stance. if the bund yield would pop up to 150 basis points, that would take the u.s. treasury curve up with it, but if we do not have the economic data to go with that higher yield, that will be
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negative for risk in the united states and for the united states economy as well. betty: absolutely. michael, great to see you. thanks so much for joining us. michael purves, chief global strategist. one feature on the bloomberg we would like to bring to your attention is our interactive tv function. you can find it at tv . you will not only be able to watch us live, but the previous interviews, dive into any of the securities or bloomberg functions are talk about, and you can become part of the conversation with us by sending us into messages during our shows. yes, ask us. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪
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shery: this is daybreak asia. i am shery ahn in hong kong. betty: i am betty liu in new york. said to be seeking a buyer for a bundle of assets in europe as it seeks to
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incorporate its acquisition of meet antitrust demands. the assets generate about $200 million in annual sales and are mostly part of the company's agricultural solutions unit. potential buyers are said to include australia's new farm. shery: tesla is adding diversity cs a board some critica say is too close to elon musk. roles on take up the thursday. the news comes after the stock tesla crashed a on autopilot. the driver said his car accelerated and overturned while running itself, but later confirmed the system was the activated. betty: bnp paribas has been fined almost $250 million by the fed for failing to prevent fromncy traders
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manipulative prices. they reached a three and $50 million settlement with new york. -- 300 $50 million settlement with new york. bnp has been ordered to improve oversight and internal controls on foreign exchange trading. shares have been soaring in extended trade after subscriber growth numbers crushed estimates. that is get the details from bloomberg's lucas shaw in los angeles. i am a surprise the stock is roaring right now. what was holding that the company was a skepticism about subscriber growth momentum, and yet, they killed it. how did they manage it? >> netflix is not the most forthcoming company when it comes to details of where they get their subscribers or who is watching it. the best you can tell is that they are succeeding all over the world because they now operate in 190 countries. they have a lot of places from which to draw. they added customers in the quarter, 4.1 million of which came from overseas.
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my guess, based on what you see from analyst estimates is it is a mix. they will get 600,000 from germany, 400,000 from brazil. so on and so forth. there was some concern that offlix had tapped out a lot the u.s. market and international was going to be a big challenge for them. what we have seen over the last couple years is they have adequately moved into some of these new markets, figured out what the customers liked, and made shows and the livered. at the same time, internet tv continues to spread. they do not have a whole lot of that court is to look back on. shery: ok, but $6 billion in programming costs in 2017. do they really just spend that much money for our entertainment? >> they would say they need to spend more. the continue to increase amount of money they will spend on programming, largely because they are putting more and more into originals. it has only been five years since they made original programming and than this past
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thaner, they released more 50 programs from original series, movies, standup specials, documentaries, kids programs, so on, and so forth. as you point out, it means they are spending a ton of money and they're free cash flow was very negative. their operating margins are very small, but long-term, the business looks good. investors are forgiven them for it. this year, for the first time, their international operation will have a positive operating margin. as the business exist as they paid for it, it is making money, but they keep putting it back into investing in more shows. betty: they are investing in their business. that is what they do. thank you so much, lucas shaw on the netflix numbers, watching the nasdaq move based on this surge we are seeing in netflix. much more ahead. wanda's negative watch. the reasons behind that, next,
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at the pressure grows on wanda. this is bloomberg. ♪ so new touch screens... and biometrics. in 574 branches. all done by... yesterday. ♪ ♪ banks aren't just undergoing a face lift. they're undergoing a transformation. a data fueled, security driven shift in applications and customer experience. which is why comcast business delivers consistent network performance and speed across all your locations. hello, mr. deets. every branch running like headquarters. that's how you outmaneuver.
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anchor: tuesday in hong kong. it is a rainy day out there. the only positive thing is that the markets are murdering. the hang seng index at the highest level since 2015. that is some good news. we are 30 minutes away from asia's first major market open. betty: a little bit brighter over in new york. 7:30 p.m., monday evening. a nice summer, weekday evening in new york. market also close. just mixed i would say. investors are waiting for earnings to really move the market. you saw that with the shares of netflix. i am betty liu in new york. shery: and i am shery ahn in
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hong kong. you are watching daybreak asia. first word news with nina melendez. nina. nina: thank you. wanda's expansion plans under threat. sources say funding could be denied with the come warmer it reaching restrictions on investment. retaliatory measures may include banning banks from providing funds and barring wanda from selling assets to local companies. emirates saysb there is little likelihood of a speedy resolution to the qatar crisis because the saudi-led alliance once a deal that will endure. the foreign minister says the block needs a clear signal that qatar will re-examine its position on extremism. the group is demanding though the cut ties with iran and al jazeera network.
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to pay financial guarantees. documents seen by bloomberg state they do not have to set while the casen is being tried. 21 people linked to the nine faced charges, including murder. 19 people were killed when the dam collapsed in november 2015. the new king of thailand has greater powers over what is reputed to be the world's richest oriole fortune, estimated at more than $30 billion. the crown property bureau is placed under the king's direct control. the assets represent most of the royal family's wealth. the bureau was technically under government control. global news, 24 hours a day, powered by more than 27 a 2700alist and analysts -- journalists and analysts in more than 120 countries. i am nina melendez. this is bloomberg. betty: we are counting down some of the major market opens in asia today. furthermore, here is adam haigh in sydney.
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sentiment seems to be holding a very well for equity investors. this earningsinto season. what are we going to see throughout this weekend? adam: it does really pick up this week, earnings season. johnson & johnson. big bellwethers for their industries. this has big implications for asian investors who want to take away tidbits from those companies. .apan comes back online we saw some upside in asian equities on monday. looks like we have a little bit more to go today, but there is not a huge amount. we are waiting for more of those earnings reports to come through to see if we have got enough of those. fairly lofty expectations. enough to have got continue this equity rally that has already added $10 trillion to the value of global stocks this year. so it is going to take quite a bit more to keep this pushing
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on. interesting move in the kiwi dollar, selling off. worries around that inflation number that we came out. interesting to note that we saw a big decrease in rate hike expectations for this time next year as recently as two weeks ago. it was pretty much 100% chance of a rate hike by this time next year, and that has come down quite significantly. it is a tricky place for both bullsr the kiwi -- for and for the kiwi dollar. shery: we could get further upside for stocks this year. for the s&pincrease 500 by year-end. that is quite a call. how do they see this happening? .dam: it is indeed what is driving this is what we have been talking about this morning urine in earnings, earnings, earnings. they say expectations are not
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too high at the moment. they say there is definitely room for us to see further upside if earnings beat. as we see with the revenue growth numbers, just that gradual increase in 22018 is into -- thatet gradual increase into 2018 is what the market is looking for. clearly, morgan stanley, not of that view. they say we can get further 10% upside by the end of december. not that many months to achieve that, so that would be quite some rally. the second point as well that they see is that there has been a disappointment around the trump administration and around expectations for reform, both to health care and to tax reforms. they say that, as some of that starts to revitalize itself in the second half of this year, that may also give a further boost for u.s. stocks. shery: adam haigh in sydney, thank you. boost for thisa
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one company, at least not when it comes from s&p global. ony have put units of wanda what for possible credit rating downgrades following the unexpected asset sales to rival developer sooner. facing asaid to be government crackdown after allegedly reaching restrictions for joining us now is the s&p global ratings director of corporate ratings. thank you so much for coming into the studio. i would say that the asset sales would in fact improve their debt outlook. it would be a credit rating positive. why were they put on negative watch? >> from the debt perspective, it is possible the debt could come down here they are selling the bulk of their land reserves to a rival developer, so the earnings and the cash flow of the company would reduce eventually, so over a financial leverage perspective, is uncertain whether it will be positive or negative. shery: if you take a look at the
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default risk for the company on the bloomberg, function drs k on the bloomberg, you see that their default rate has been falling. -- if we see default risk is falling, what you are concerned about, is it more than just the finances of the company? does it also involve possible political risks stemming from what regulators are doing in china? the newsthink a lot of right now involves the wonder group. the rating we have is the commercial, the property subsidiary. from the us and sale, you are right. from our perspective, the sale unexpected. it seems abrupt. the chairman was still funny new agreements to sign up the theme parks, and with this deal, they will sell the majority.
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91% stake. it does seem a little bit on. they are providing a 50% loan to the seller, to cnet. and ats unusual to us the same time, they are in the middle of an application on the mainland stock exchange. we are not sure how this will impact the application status for the listing. betty: it has got to be more than just a little bit odd. you just detailed, and i was reading through the s&p statement on this, and you rightly point out just some of the things you just mentioned. it certainly does nothing to make business sense at all. why would you sign tourism projects and suddenly selloff a majority of these properties? it does not make business sense. if you're selling them off of book value. what do you think is behind this? cindy: i think it seems that the company wants to be seen as a
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non-property company. they want to reduce debt. it could help with their listing status and application on the mainland stock exchange. at the same time, having such a major asset disposal in the middle of a listing, we are not certain whether that will have a negative impact on the company as well. betty: but is it going to help with th leverage? will it help with debt? mayy: the reported debt come down. some of those at the project company level will spin off to to sunac. willajority of the company also be sold, so it's earnings and future cash flow will come down significantly, so it could be slightly positive or it could be negative depending on what the company's future strategy is. shery: we are not only hearing
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about china's plans for this company, for wanda, but also from any other conglomerates, regulators, to scrutinize overseas loans. very inquisitive corporations like anbang, internationals. does this signal an end to china's financial engineering companies have carried out so far in order to grow? cindy: in terms of the overseas acquisition of the company, it seems like the regulator is putting more scrutiny on them, and perhaps the funding, the domestic funding of the acquisition may be temporarily put on hold or could be permanently put on hold. we want to see what the regulators do on a more permanent basis, but it does seem like, for now, a lot of these overseas acquisitions will be much under scrutiny. betty: before we go, i know you will 90 days here,
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be talking to management at one of your it what are your key questions, top questions for management? cindy: we will be asking about their future strategy. they have been trying to go on a model, but we do see this disposal as somewhat inconsistent with what they have told us in the past. we will be looking at the strategy of the company and what the future earnings and cash flow for this company will look like, and also, what we are concerned about is the a share listing status we will be getting an update on as well. betty: thank you so much, cindy . much more ahead. the challenges facing china. if here's the transmission could spark an increase in insolvencies across the asia-pacific. we will focus in on it already. this is bloomberg. ♪
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shery: we are counting down to asia's first major market open this morning. japan futures are real peninsula the week after being closed yesterday. you can see nikkei futures are pointing to a lower open as we have a little over 15 minutes ago to the start of trading japan. this is daybreak asia. i am betty liu in new york. betty: i am shery ahn in hong kong -- shery: i am shery ahn in hong kong. it is seen as crucial to reduce excess capacity to hit the growth target, up 6.5% this year. however, chinese courts accepted a record of over 5600 bankruptcy findings in 2016, up 54% from the previous year. joining us is the senior asia economist, the largest credit insurer globally with 34% market share. thank you so much for coming into the studio.
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gdp numbers. they were pretty strong. when i see insolvencies rose so seeingst year and we are an increase of these bankruptcies, it makes me think. is this a symptom of chinese authorities cleaning up the mess right now? or is this a symptom of the slowdown? i want to put my money on the fact that they are trying to clean up the mess, and if they want to deliberate and curb financial risk. am i right? >> i think there are many reasons to this kind of trend. the reason behind these trends are many. the first one is related to the that leverage -- debt leverage. this is a huge number, so there corporate.ssure on this is one of the drivers, the first reason.
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the second reason is the over capacity, which has to play my we have higher numbers. you have more corporate going bankrupt because of that. are the first to reason, and the third one is of course lower growth. the have a similar increase of 6.9%, but we should not forget it is a decelerate trend. the lower demand trend explains partly why we have this outlook. the last is the reason you mentioned, the fact that you have more reform from the state now trying to move to a more quality-driven economy. shery: i wonder what demand has been for the property sector, because we are getting property price numbers later, and about one hour or so. the expectation is that we could see a donation of growth as we have seen in the past two months. statistics data, we
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saw sales jumping more than 20%. could we see more insolvencies coming from this again? mahamoud: when we look at the number we had yesterday, we should see that differently. if you look at the growth number, of course it was strong, but when you look behind the figures, we see already some adjustment. if you take the property market, the property market's investment, it is 8.5% increased in nominal terms. below the figure we had in the first five months, which was 8.8. of thiseceleration sector. if you have lower investment, should have this going forward. shery: the key question for the rest of asia will be how will these insolvencies stemming from china affect them? so far, it seems we have a recovery. that is helping and boosting everybody else's business, but
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will we continue to see this? or is there some discrepancy on how things could move forward when it comes to the regional outlook/.'mahamoud: already, -- outlook? mahamoud: it is already affecting the outlook. so that means, we look at insolvency by region. when you look at the asia-pacific, we see 3% next year. when you look at the distribution of insolvency, you have a 10% increase for china, from manyincreased trade partners. a look at singapore, where we have seen an increase of 10% to 12%. we have some pressure already in some corporate, because we have that in the supply chain related to china. many a highly dependent on trade with china. betty: i am curious how you think china is dealing with these zombie companies and what you think -- whether you think
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the judicial system is doing a good enough job dealing with these pointless they'll become he's in china? mahamoud: i think it is a difficult question to why? they are not doing well. they have to deal with their own target. when you set a target of 6.5%, youcannot do a stronger -- cannot do a strong adjustment. you need to be more slower when it comes to adjustment. i think china has to balance between crude target and quality growth, which is a very difficult target. it is a very difficult problem. this is the reason why we are one of the companies who are looking for a lower growth target. you can increase more on quality driven reforms. shery: something that is very interesting, as betty mentioned, when it comes to cleaning up these zombie companies, is also what happens to those employees. what happens to employment? the pboc advisor, coming out and
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saying they will deal with employment-related issues arising from these zombie firms getting put away. will that be the case or could we see some bigger of people in china -- bigger upheaval in china stemming from its cleanup? mahamoud: one should not forget that one of the big targets of china is social. it is not just economic. it is social impact, the social impact of this reform. this is the reason why the cleaning got so slow. you cannot afford having too much people who are not employed in the chinese economy. more than 10te billion urban jobs. you need to have high growth. if you need to have high growth, you need to maintain companies that are employing many people. this is the reason why i think the reforms are lagging and it will take time before you have reform in china. shery: we always talk about reform as opposing forces in the
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chinese economy. reform against stability. in your view, when the pboc tries to balance these two out, what would be the biggest trade-off you will have to deal with this year? mahamoud: first, there is too much pressure in central banks on the world. in the pboc, the pressure is tremendous. if you commit growth targets for the reserve, preserve the balance, and try to serve the economy efficiently, meaning cutting inflation, supporting growth, and creating jobs, i think it is not possible. you need to choose some targets. chinas the reason i think is struggling sometimes. so far, they succeed in achieving the growth targets. the growth target is almost secured. this is why we think in the remainder of the year, we focus on quality-driven reforms. growth is slow, not at a strong pace, but you reduce the
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imbalances weighing on the economy. shery: given growth is still strong, if they have more leeway in carrying out the deleverage -- moud, thank you for joining us. of course, you can find a roundup of all of the stories for today, including china's property price data, what to expect today. go to dayb on your terminals. it is also available on mobile in the bloomberg anywhere app. you can customize of course your settings, so you can get the news and industries and assets you care about. 20 more, coming up. this is bloomberg. ♪
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betty: this is daybreak asia. i am betty liu in new york. shery: and i am shery ahn in hong kong. an insurance company plans its into for a into -- foray asset management when it's all
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mine financial division start servicing lands out of singapore. target chinese nationals with offshore assets rather than residents of singapore. state regulators have given in principle approval. betty: uber says it will stop providing rides from a cow, but will look at a legal framework to resume operations in the future. it is pulling out of the gambling enclave for now because it cannot aaron t a sustainable business environment. in no longer operates in mainland china. an indian court has ruled a bankruptcy case brought by the r.b.i. against as our steel will continue.l will they have more than $6 billion of loans and insists it is making serious efforts to revive operations and be paid debt. they are trying to force
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bankruptcy proceedings. come: plenty more still to with asia's first major market open moments away. shery: and of course, we did see the msci regional benchmark at the highs level since 2015. we look at the details of how they will start trading with sophie, written, watching the open in australia, tokyo, and korea. sophie kamaruddin, watching the open in australia, tokyo, and korea. sophie: take a look at futures in sydney, pointing slightly higher here. margaret's are going to be watching the rba minutes to see whether that central bank will join the hawkish game we have otherbserving from central bankers. japan is back online, looking to knock off 30 points at the start of the nikkei 225 trading session this tuesday. the earnings growth is continuing in tokyo. thety to show you in
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trading session this morning. watch the reaction to sony pictures and the funding deal after a deadline. sony has been at a crossroad when it comes to recovery, following a series of film flops. a pharmaceuticals company on its blockbuster drug has been revived in the u.s., which could help them send off competition when it comes to the generic drug market. sydney, we are checking on reaction to rio tinto's second quarter output report. they narrowed their guidance for iron ore. missede volumes fell and estimates due to poor weather. they reported results this morning. for 2017track production, and it is an exclusive -- in exclusive talks for high arctic energy for drilling in papa new guinea.
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that is a brief look at what we will be watching when trade gets underway. korea, justapan, moments from now. this is bloomberg. ♪
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♪ >> asia-pacific market see a quiet after wall street finish last. the dollar and the 5 -- the losing streak. stocks flirting with records, but not in china. the sixth time on monday. a weather warning from blackrock , questioning the u.s. economy and saying that dark clouds are building. and netflix on a roll after smashing forecast in a record setting quarter. subscribers top those at home.
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the second hour of daybreak asia coming to you from the u.s. and asia had orders. on 8 a.m. just after 8 p.m. here in new york. and sherry, of course, we're watching how the markets are opening right now. market delivered by earnings season. netflix, this huge subscriber growth not just in the u.s. but also overseas. for netflix and gearing up for goldman sachs, ibm, bank of america, so many more. we also have data points to look at property prices out of china, not to mention the minutes. excluding japan.
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remember, japan was on holiday yesterday. the markets get going. -- so i wonder >> this is now at a three-year low. with the function to show you how. weaker there at the end. slight gains in sydney and soul just fluctuating at the open here, this having slight gains on monday. take a look at the aussie dollar down about .2%.
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ahead of the rba minutes. we have offshore snapping a five day advantage. the support level, watch that level closely. born.have iron flat-ish in 2018. we have aluminum falling in june. the way we went this morning, but now it is up about .2% at $48 or $50 a barrel. the dollar rose modestly.
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it slowed more than forecast in the second quarter. to the release of that data. rba, they likely turn hawkish there. that is the focus this week. >> let's take a look at first word news. >> brexit talks resumed in brussels. the two sides discussed the
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rights of eu citizens in the u.k. and britain's potential divorce bill. a rule out trade talks until those issues are dealt with. u.s. economy is growing more slowly than expected and that the trump administration's inability to act as a threat. and that is in the rise of personal incomes they had hoped. that is data compiled by bloomberg. extending the retreat. tract by bloomberg. being heard by concerns of rising cost of powered byovernments
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more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> the world's three leading central banks, a bloomberg poll and comments from ahead of the world's biggest asset manager cast a mixed view on the u.s. economy. joining us in tokyo. kathleen, you are there to cover the bank of japan. let's start with bloomberg survey, telling bloomberg news that he sees dark clouds hanging over the u.s.. what is he seeing? >> paul allen was just telling us about it. nearly $5.5 trillion of asset management.
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give you a sense of why we listen when larry fink says things like u.s. economy. he says we still have dark particular,ce, in what is happening to an economy where corporate earnings are growing and personal income isn't. you how personal income is growing. , the outlookluent isn't so good. americans are not getting more confident in the economy. theiry they are closer to career aspirations.
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look at some of the details for donald trump. 50% view him unfavorably. taking the u.s. on the wrong economic path. did,fficials have already boosting the economy. >> the latest inflation showing another deceleration. they tied their hands at this meeting? does, perhaps it doesn't.
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what the survey shows is that it is all quantitative easing. the central banks. there's a little bit of joy. -- btv 465. juster away from being under 2%. the prices of those. line, it is the end of
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august. the jackson hole, kind of open the door to the stepped up purchases and the quantitative easing. to give us this change of policy to signal the quantitative easing pullback. it will be signaled in september officially. as one of the reasons they may not have the policy bias this week. it is quite a quiver of arrows to use. we have yield curve control. and of course, we have bond purchases to achieve that cold.
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it will not change anything about the rates. it is a clear message by stepping up to buy bonds when the 10 year yield was rising just above. the third one of the year. it will be on global investors as well. >> it will be drawn for some time soon. kathleen hays, thank you for joining us. financials plan to grab cash,
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they talk with the international president a little later. , bejewel global investors and where they see value there. this is bloomberg. ♪
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♪ betty: this is daybreak asia. >> let's talk about the asian markets now, because our next guest says the stocks in this region remain relatively cheap while breaking out of a down trend. it is head of asian equities. maybe we see stock markets soaring. the highest level since april of 2015.
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>> it was something that had been missing -- missing in asia. i think that can continue to push the market higher. >> as we got those figures out of china, very positive when it came to economic data, the shanghai composite taking a hit. when it comes to the chinese markets, we see this sort of negative correlation with the rest of the world. this is the charge, two to seven on the bloomberg. we see the shanghai composite , the, the world index advanced economies, of course. outperforming the mainland markets. inverse correlation, taking place.
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the inevitable correction. it is inevitable. we see that correction coming soon. >> this full cycle. as well as the economy being ok. it stopped and there is no reason we can't see a similar peopleo what we did -- look for that better opportunity.
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and there's the eight share market up about 43%. so now we see it getting down to the stock level. the global markets, coming back since then. around 11 times earnings, we think it actually come back to an interesting point. >> the government scrutinizing these more inquisitive companies. or dancing sentiment pressure on the markets.
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>> i think always when activities like this, it does create it. think people need to take into that. that's what is happening with growth overall. it is quite robust and this is backed up by the numbers we saw yesterday. we think there is still that background to the market as a whole. >> what our investment in china in particular? >> a couple of things we quite like in china is the change in attitude towards pollution. if we look around, it has generally been considered secondary to economic growth. we think it has started to
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change. it has quite large ramifications. it's not necessarily people thinking of great investments but they have been very solid investments this year and that is better players gaining volume. has moved forward. that is quite an interesting area. we have seen areas where china has to do to move off the value add change. it means that it has been companies and quite good position. >> the key difference in china theow big in a forest
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chinese authorities are. if you look at the outflow, what do you think authorities in the game here is in china? is it only regulating shadow banking. >> for regulators, you have be very aware. close to 1001, it is an equity investor. only look at china, we see that there is opening up the economy. it is a general move forward in trying to create a banking system that is more open on the market driven currency that is more open and more market-driven than we have seen stock connect which is allowing capital flows and bond connect which could be
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a much larger deal when you consider the size of the bond market. it's a case of two steps forward and one step back. it gives opportunities for investors. >> thanks for joining us today. .he head of asian equities and you can get a snapshot of today's stories and today's edition of daybreak. dayb on your terminal. customize settings that you care about. this is bloomberg. ♪
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>> this is daybreak asia. the latestcheck of business flash headlines at this
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hour. playing the first foray into wealth and asset management outside greater china next month when it's online financial division starts serving international clients. it will target global clients including chinese nationals with offshore assets. rather than residents of singapore. regulators have given in principle approval. >> against sr steele, it will proceed. it makes serious efforts to revive operations. it is trying to force bankruptcy proceeding after having more powers to resolve solid loans. >> uber will stop providing legaland come up with framework to resume operations in the future. it is pulling out of the
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gambling enclave for now because it can't guarantee a sustainable business environment. uber no longer operates in mainland china and faces resistance from tax associations in hong kong. >> netflix releasing second-quarter earnings after the bell. cory johnson breaks down netflix result. we see the regular market and a positive sign for the company because they added a lot of subscribers. losses andcash flow that probability. they added over 5 million subscribers. we are seen as hope for this company.
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they are going way up for netflix, competition from hulu, hbo, amazon prime, showtime, fx, and many others. all that competition is raising the cost of content but you don't see it on the income statement. it you see a little bit of profitability. that number really jumps out, how many users the service has. wall street seems to like it. the cost of content is going up. that is extensive. the marketing cost, getting subscribers. also adding to their woes. even the content they don't own.
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oranges the new black and other content they do only good dave chapelle special or the amy schumer comedy special. it is helping the shares of that flex. look at the a markets and play right now. we see the nikkei back from its holiday, down .3%. it down day for most markets across asia. we see the regional down .1% after soaring to the highest level since january of 2008. and the cost be falling from record highs. >> with them for those minutes. china'sll be watching
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latest property prices in an hour or so. especially as wanda his real estate unit was put on negative watch. these days families want to be connected 24/7.
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that's why at comcast we're continuing to make our services more reliable than ever. like technology that can update itself. an advanced fiber-network infrustructure. new, more reliable equipment for your home. and a new culture built around customer service.
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it all adds up to our most reliable network ever. one that keeps you connected to what matters most. ♪ >> it is 8:30 a.m. in singapore and in hong kong, it is pretty gray out there. we are half an hour from the open of trading there. we are in a very rainy hong kong. go to theld just bureaus where the weather is good. i'm betty liu in new york. you are watching daybreak asia. let's get to the first word news with paul allen. plans areexpansion set to be under stress. sources say that projects could -- sixed but they are purchases including carmike
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cinemas is seen to have violated the rules. the territory measures may include banning banks from local companies. says thereign minister country remains committed to stringent monitoring of the nuclear programs. it will make an announcement in the next few hours about whether the u.s. will certify tehran's compliance. a conference in new york was told that iran is abiding by its obligations. >> iran is committed not to produce nuclear weapons. paul: the united arab emirates says there is little likelihood of a speedy resolution to the qatar crisis because the saudi led alliance want to deal that will endure. uae foreign minister says that the block need to clear signal that qatar will re-examine the position on extra miss him.
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is demanding qatar cuts ties with iran and shut the turkish military base and the al jazeera news network. has denied audge request for companies and individuals related to the disaster to pay for guarantees. notments say that bhp does have to set aside $6 billion while the case is being tried. 21 people linked face charges including murder. 19 people were killed when the dam collapsed in november of 2015. the new king of thailand has greater powers over what is repeated to be the world's richest royal fortune more than $30 billion. a law that took effect monday places the crown property bureau under the kings direct control. assets represent most of the royal family's wealth. previously, the bureau was technically under government control. global news 24 hours a day
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powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. betty: let's take a look at how asian markets are shaping up so far this morning. we are looking for lots of ego data as well as the be rb minutes. are the session's so far this morning. we see a six-day search here. yen climbing. it lower there by about .33%. aussie shares, those are falling for a second straight session. down .6%. minutes, it rba drags. is new focus here zealand assets following. .4%kiwi plummeting about
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this morning. take a look at this pair, the aussie kiwi. consolidate. the trend very much in favor. tocould be seeing a deja vu get the kiwi back. at 110.t if they do not come down, there could be time. this shows you the dollar-yen said to converge on the 200 day moving averages. it is 11191.
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the contrast to a tightening yen. there is a new twist in the tale -- china plans to cut off some funding for the group and willing to give regulatory approval needed for some of the deals. curtail hisld drawing for a global entertainment empire. inquisitive. why is beijing targeting monday? >> i think the key reasons behind it is that they want to stabilize the yuan. year, china has been
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discouraging companies. transactionsnt that trigger the capital outflow. thator some assets protects the core business. they try wherever they can to do it. this element would be the china and banking regulators. it is kind of also being targeted. >> they are next in line. a broader move by chinese authorities. , specifically, are being targeted here? >> deals, we know that. it has been really close to the monitor.
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that they are being entertained. but is thatfor now, likely? is related to entertainment. it related to assets. shery: what about the effect on the company's brand and divisions, right? they were buying and buying, trying to be this big entertainment empire. for that, beijing's move is definitely delaying hollywood dreams. as he tried to build this entertainment empire and use those acquisitions, he partly the bigbout acquiring six studios, trying to take of the overall global movie market by 2020. trying toijing
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closely look into these acquisitions, it would be hard for him to move further. thank you so much, prudence continuing the fortunes with wanda. china releasing the numbers in just the next hour with moderate theyown in acted as continue to bite into the bigger cities. joining us now for a lucas -- a look ahead. will we see picture here with the property numbers that are due out? is not one of the numbers we had the economist forecast but it has been happening in recent months. in 56 of the 70 cities from a month earlier. month before that, it was rising and 58. we're on this downward trend and we wouldn't dissipate that would get in you and that is where it
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does take some effect. what we're seeing is a very market. variated the money seems to be flowing out. they are rising quite rapidly right now. is that less of a concern? >> there's so much angst for these prices rise, --perties
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>> they're not talking to much about what is happening on the commercial side. the property cycle is so important to chinese economy. it is better than expected. it was better than expected. down.g some sort of slow
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most economists do anticipate. shery: it was a huge beat, wasn't it? michael scott, thank you for joining us. a forecast of what is happening with chinese property markets. coming up, more than half of china's $5 trillion plus global payments market. it's not stopping there. and financialss. next. this is bloomberg. ♪
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shery: this is daybreak asia. on was doubledls earnings in fiscal 2017, boosting pretax profit i 86%.
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here in the u.s., still trying to get clearance from regulators to buy money grams, how critical of the deal for the company's growth? it is quite critical. we know that you are celebrating, so to speak. talking about the capitalist economy in asia. that is coming up in a weeks time. we refiled with the u.s. authorities. >> we remain very excited about the transactions. consumers around the world very much want to do more. it will be a great platform for us to do that. when we announced the
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transaction back in february, we look to close in the second half and we're still on track to do that. working through the regulatory processes and the state approvals. they are on track to close in the second half. we are looking forward to that. betty: what are the regulators saying, though? in the refiling, what do you need to change in order to get the regulatory approvals? mr. feagin: i can't comment specifically on the processes as they are confidential. but i can share with you that the processes are proceeding as we initially expected. we're working in a very constructive manner with a regulatory bodies, responding to their questions, answering further inquiries for data. it's moving along quite well. betty: nothing substantive to changing the deal. mr. feagin: no changes to the deal. betty: how will this affect the
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ipo if it has any impact? mr. feagin: i don't think this transaction has anything to do with the potential ipo. of our coreis part strategy, expanding the products and service that we have for the customers around the world. and that is what it is really looking to do. and not related to any consideration of a potential ipo. to keeput we do have asking about the potential ipo and if that happens, what are the pros and cons of the different places that you could list? as it relates to potential ipo, we don't have any current plans or timetable to go public. we can see the benefits of being a public company. if and when we make a decision at that, we will look at things such as which venue to choose and the like. for now, we are very focused on expanding our business. there's a huge amount to do. expanding the partnerships
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around the world. and looking to provide more services and things to our customers. that is really our primary focus at this point. betty: talking about that expansion, you made inroads to thailand, south korea, india. what is your target when it comes to that expansion? we are pleased with the expansions we have made so far. thailand, thea in philippines, korea, and hong kong, we are expanding. are focusing on those regions were we have already announced partnership. and further partnerships in asia. those are the areas where many chinese tourists go. there are natural connections with the core customer base in mainland china. and the greater opportunity to expand the local user base. we are focused on continuing to build a customer base their and
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perhaps extend those partnerships to the new markets in asia. betty: tell me about this week where you talk about the city's campaign. mr. feagin: china has really embraced the cashless society. betty: i was in hong kong and i got a firsthand taste of it. mr. feagin: i was telling my wife, i forgot my wallet. i'm not even worried. it should be fine. we are very excited about the cashless cities week which is august 1 through eight. and this is a key initiative where we are trying to show customers what the nationalist lifestyle is all about across china. i heard that, you know, i mean, this is anecdotal. homeless people aren't even using cash anymore. do you really need to educate people on this?
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mr. feagin: china is probably one of the most advanced countries in the world in terms of the cashless society. we have five cities signed up to be a cashless city as part of this initiative. also chen jin, wuhan, and more part of this initiative. cashless is the way of commerce in these cities and it goes down from the panhandler, taxis, movie theater, all the way down to the panhandler. inry: when you talk about it asia, you can't not talk about india. how much this started last year, that your business is there as you make inroads into the market. mr. feagin: india has been a huge success story for us. we have greatly expanded the customer base in india. demonetization
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was something that encouraged people more and more to think about the use of e-wallets and use them more regularly. that demonetization has stuck. payment, itmobile has continued to expand. they are expanding those cases with atm much more broadly. up.tarted doing mobile top it across the board, anything they are across the board. they won't go in on this campaign because it is their rival. using chat as their method of payment. how do you compete? i heard a lot about them.
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compete on this? >> it is one of the most competitive markets in the world. we have tough competition all around the world. that doesn't. tests at all. that is the most innovative for us and the most energizing. these are companies that are changing consumer behavior and encouraging people to do a lot of things that we encourage them to do. betty: why did they choose one over the other? what will be the difference? mr. feagin: it is a method of convenience. also great connectivity to merchants. in addition to the consumers. productsose can show and services that they offer. they can even offer promotions if you wanted to do a particular type.
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you can come in and get that, maybe even get this on it. we work very closely building those. there are different markets where the chinese tourists are going. and a number of chinese tourists are expanding. that conductivity between the merchants and consumers we see as our core competitive advantage. shery: the china -- the competition is also heating up. i wonder that when it comes to the u.s. markets, with president the americaizing first policy, do you see the different impacts on why you're are proceeding with different regulatory approval? >> we see this to be a very and from a political
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point of view. it is a regulatory approval process. it is a very clear process and a clear set of guidelines. they plan to get that done in the second half. betty: doug fagan, -- feagin, thank you. republican senator's are going to vote against the health care bill. much means that this bill is going to be extremely difficult. mitch mcconnell had delayed again, the headlines here.
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republican senators are voting against this health care bill. it certainly looks like these odds of becoming insurmountable to get this health care bill passed. this is bloomberg. ♪
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a quick check at the business flash headlines at this hour. china is set to be seeking a buyer for a bundle of crocker assets in europe as it is to
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incorporate its 43 billion-dollar acquisition ons agenda antitrust jim and. the assets generate 200 million in annual sales. agricultural unit. the buyer is said to be including australia's new farm. tesla is adding diversity to abort some critics say is too close to ceo elon musk. when he first century boss -- fox boss james murdoch and others will take a role on thursday after the stock fell on claims that tesla crashed while on autopilot. the driver said it accelerated and overturned but later confirmed the system was deactivated. that is it for daybreak asia and we have bloomberg markets coming up next. rich salama joining me in the studio. and half an hour, we get property prices? sydney, and the
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latest. narrowing, cities between the one and two, overheated some would argue. the head of asia-pacific research joins us for that. brexit. right? and from the new university of south wales to discuss where we are with that. what it really means. soft brexit,, and hard brexit, etc.. that is what we are looking at over the next couple of hours. >> lots to come, rish. more to come. this is bloomberg markets. this is bloomberg. ♪
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♪ 9 a.m. here in hong kong. 9:00 monday evening in new york city. trouble for this man. feeling the heat. he may be punished for breaking investment rules. looking at global stocks flirting with records, but the world worst in shenzhen. can they break their slump today? haidi: and i'm haidi lun in sydney. also coming up, netflix surging ,ndex traded -- extended trading smashing forecasts in a record second quarter. this is "bloomberg markets: asia." ♪


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